I’m opening a thread for the Swedish “Proptech” company called Flowscape Technology.
Flowscape Technology in brief:
Founded in 2011, listed through an acquisition in 2018
Benefits from the global trend where companies are moving to open-plan offices and smaller spaces as remote work increases.
150 customers in 30 countries, offices in Stockholm, Sofia, London, and San Francisco
Market value approx. 200m SEK
The CEO owns 24% of the shares
COVID-19 is a positive thing in the short and long term
Share price approx. 0.11SEK, one target price of 0.17-0.2 SEK
Products:
Flowscape’s basic product is a room booking system familiar to many, where you can book a meeting room via, for example, an Outlook calendar, and there’s a touchscreen outside the room. However, Flowscape’s product range includes much more, as shown in the image below. Flowscape’s strengths are highlighted in offices where employees don’t have their own workstation but choose one when they come to the office. Through Flowscape’s phone app, you can book a desk in advance, even the night before, ensuring you get a workstation and also that you can sit next to a teammate. It’s worth checking out the entire product range on their website.
Flowscape reacted quickly to COVID-19 in the spring and added the ability for customers to block workstations.
Employers can pre-select which spaces are available and use sensors to monitor how many people have visited the office and where there has been movement.
Flowscape has seen high demand for this COVID-19 product recently, which is reflected in new deals. However, these have not been significantly reflected in the share price.
The company’s expected revenue in 2020 is approximately SEK 44m, and it is expected to rise to SEK 80 million in 2022 (Analysguide analysis). The company has reported positive EBITDA in recent quarters, and the bottom line is negative due to write-downs from the Crowdsoft acquisition. The company sells products in a license model, billing per user/month.
A few of my own thoughts on the stock:
COVID-19 will strengthen the trend where companies reduce workstations in offices, and the office becomes more of a meeting place. Short-term benefit from this: Integrated workplace management solution | Flowscape
Still suffering from the Crowdsoft acquisition; old Crowdsoft owners are significantly at a loss and are still selling shares cheaply. Goodwill write-downs also make the numbers look worse if not examined more closely.
Have you checked how this compares to, for example, AskCody? That one at least has a direct integration with the O365 environment, what about this one?
At a quick glance, Nopella seems to offer “only” the possibility to book meeting rooms and not, for example, workstations. There are competitors, and Flowscape’s product is not “one of a kind,” but based on its success, the product is good and works.
But how? My spouse and I have been 100% remote since March and haven’t needed to book a conference room/workstation once. What happens if companies reduce their office space and mostly switch to remote mode?
This is a very valid comment in itself, but we’re not moving entirely to remote work. We’ll have even smaller “precision facilities” that require good management, so Corona might even increase the need for them.
Same thing, but I definitely want to go to the office again when it’s possible. Not every day, but a few days a week. There are certainly people who have gotten used to remote work and don’t want to go to the office anymore, but I believe most of us also miss the social aspect and will therefore continue to go to the office, just not every day. In addition, customer meetings will certainly be held physically in the future. Teams meetings will certainly be held more often in the future, but sales and customer relationship maintenance are just easier live, and then the office is the meeting place, unless customers are invited home. And if you go to the office for a customer meeting, it’s very possible that you’ll also stay at the office for the rest of the day.
A new deal was published this morning, this time from Canada. This particular client already has Flowscape’s solution in 14 offices, and this will be their 15th. This shows that the product works when global clients return and want the same solution in different countries.
Below are a couple of diagrams illustrating the revenue model.
So, in year 0, Flowscape earns revenue from hardware and potential consulting related to product implementation. From year 1 onwards, Flowscape earns license revenue based on the number of users. Contracts are usually around 3 years long, but I don’t believe clients will easily switch to a new system after 3 years, partly due to the associated workload but especially due to the costs.
The image below shows how revenues then accumulate; the estimates are Flowscape’s own calculations.
The blue bar shows total revenue for the year, while the red bar shows recurring revenue, specifically license revenue.
One of Sweden’s larger municipalities ordered Flowscape’s solution for their new town hall. The transaction is carried out together with ATEA with a contract over five years. The total order value is 2,4 MSEK, of which 1,5 MSEK is for software and 0,9 MSEK for hardware & installation.
Newsec expects that the average worker will work from the office for 3-4 days a week post-pandemic, but the office needs to become more efficient, modern, flexible, and have more meeting space
Yhtiön tuote sopii boldattuun osaan täydellisesti.
Flowscape Technology AB: Flowscape participates in the share day Stockholm on March 17!
Flowscape’s CEO Peter Regio will on Wednesday participate in the share savers’ theme event SaaS (Software as a service) during Aktiedagen Stockholm. The event is free and can be viewed digitally via the link: https://www.aktiespararna.se/saas . Flowscape goes live 13.30-14.00.
Reigo will, among other things, present Flowscape’s offering and future vision, how the pandemic has changed the offices and the company’s international growth in 2020 and beyond.
The reference list on the website has been updated. Of these, at least Ricoh, Atea, and Ericsson (if I remember correctly, also a client) seem to be partners, but most are clients. Many well-known and especially global companies with offices around the world.
Google translation:
The technology company Flowscape reports lower sales but also a loss during the first quarter compared with the year before.
Sales amounted to SEK 6.6 million (6.8).
"Of total net sales, software revenues amounted to SEK 4.1 million and during the quarter we saw a significant increase in current recurring revenues. We see a change in demand, especially outside the Nordic region, where customers choose solutions with increasing software content, which gives us more recurring revenue ", the report states.
Operating profit was SEK -6.3 million (-6.3).
The result both before and after tax was SEK -6.3 million (-6.5).
Cash flow from operating activities amounted to SEK 2.4 million (-0.8).
Cash and cash equivalents amounted to SEK 10.1 million (20.9).
CEO Peter Reigo states that they are beginning to see increased interest in the market in connection with more countries opening up and companies returning to the offices.
“During the first quarter, twice as many demo requests were received via the website as during the whole of 2020. Mainly, IT solutions are requested for the new everyday life with a mix of work from home and in the office. We see the new way of working as positive for the demand for smart office solutions, ”says Reigo.
–snip –
I personally expected Q1 to have already seen a turn for the better and growth, but the solution seems to be struggling to appeal to the market. Let’s hold for another quarter and see if anything comes of this in the autumn.
This was positive. In terms of revenue, it seems that more hardware was sold in Q1/2020, meaning one-time invoicing, because recurring invoices (software) have already increased due to new customers.
